The recent CGA Peach 2020 Conference saw the sector’s most important and influential leaders come together to discuss the big industry issues. CGA’s Peter Martin and Phil Tate offer 10 takeaways from a packed afternoon.
1. It’s a tough market—but there are positive signs
Setting the scene for the 2020 Conference, CGA’s Phil Tate gave a whistlestop tour of market trends. He showed evidence of major challenges—including news from the Market Growth Monitor from CGA and AlixPartners of a 2.5% fall in Britain’s number of licensed premises in the last year, and Coffer Peach Business Tracker evidence of broadly flat like for like sales in managed pubs and restaurants.
But he also pointed to some green shoots in the market, like a strong summer for pubs and drink sales, boosted by hot weather and the football World Cup; and a steady flow of new and innovative concepts. “There’s never been a more challenging time to be an operator but what I love about our market is how quickly we adapt and evolve.”
2. Brands need clarity of vision
In the conference’s head to head interview with Peter Martin, industry legend Karen Jones CBE stressed the importance of a clear vision and purpose. She set operators the one-sentence test of describing the ‘what’ and the ‘how’ of a brand in a single, simple sentence. “If you really know what you are then it’s an incredibly important north star for the business.”
But she added that success ultimately comes down to the consistently good execution of that vision. ‘It’s fine having an idea on paper… but in the end our business is one of execution—every minute of every day for every customer.”
3. Big roll-outs are harder now
Karen Jones also reflected on her success in rolling out Café Rouge in the 1990s into a brand with more than 100 restaurants and admitted she would find it difficult to achieve something similar in 2018. “The days of taking a mid-market concept and thinking you can replicate it in large numbers across the UK are looking limited.”
But she remains upbeat about the future of hospitality and brands with which she is now involved, like Prezzo, Hawksmoor and Mowgli. “It’s tough, but quality wins out…Great ideas well executed are still very much in demand, and there’s no shortage of investors wanting to get involved.” The future is bright for pubs, too, she added. “Pubs are great—they’re so resilient and have thrived through so many structural difficulties.”
4. It’s all about the experience
A panel of entrepreneurs at the conference agreed that pubs, bars and restaurants must now deliver not just good food and drink but memorable and distinctive experiences. Stephen Finch of wine bar group Vagabond said: “We’ve always taken the view that we’re not selling people wine—we’re selling an experience… we’re giving them a unique, awesome experience that they are going to tell people about.”
Vagabond currently has five sites but is targeting “20 to 25” in the UK, and more internationally, Finch said. His fellow panellists were also optimistic about expansion plans—but cautious about market challenges and over-reaching themselves too. “The risk isn’t in growth, but in growing too quickly,” said Pho’s Libby Andrews. Access to investment for expansion is getting better, added Simon Bunn of Brewhouse & Kitchen. “In the early days, it was tough… but now we have proof that we can do what we say we will, it’s easier.”
5. Food can follow the premiumisation of drink
The rising popularity of premium brands has been identified by CGA as an important trend in drinking out for several years now. As CGA’s Rachel Weller told the Conference, it means that while the volume of drinks sales has fallen over the last year, their value has gone up. “People are drinking less, but drinking better,” she said.
The challenge now for restaurants, pubs and bars is to generate a similar trading-up trend in food. “There’s an opportunity for more premium options in our venues… Consumers are willing to pay more for food, like they have done for drinks—as long as the quality is there.” But as they chase the premium market, brands must also be careful not to alienate value-conscious consumers, she warned.
6. Businesses must do better on accessibility
Hospitality businesses need to make themselves more accessible to people with dyslexia and disabilities, a Conference session on neurodiversity heard. John Levell of the Levell Partnership pointed out that 10% of British adults have some form of dyslexia, and that their skills can be too easily overlooked in recruitment, while Nick Haleof BT Ventures said disability in the workplace is not sufficiently discussed.
They pointed out that dyslexics and disabled people were being neglected not just as team members but as restaurant-goers. “There’s a huge market and commercial opportunity out there,” said Hale.
7. Tech is driving on-demand and personalisation
New on-demand technology is speeding up the supply of food and drink to consumers, Yfood’s Nadia el Hadery told the conference in her round-up of top tech trends. “Our expectations of how we get things have fundamentally changed… we want it all and we want it now,” she said.
She picked out two more big developments to watch: the rise of communities around aspects of food like veganism; and the increasing demand for personalisation in people’s experiences of food and drink. “We’re going to see more and more research and technology in this field.”
8. A no-deal Brexit risks supply chain chaos
A panel on politics and Brexit generated a lot of concern at 2020 about the shape of the food and drink supply chain after the UK leaves the European Union. The panel’s chair, UKHospitality’s Kate Nicholls, gave a cautious welcome to the proposed deal currently under discussion but warned that Brexit would probably add to high levels of food price inflation. Even more significant is the threat to the country’s food imports if departure arrangements can’t be agreed. “If we don’t get this deal it’s going to be carnage on 29 March,” said Andrew Opieof the British Retail Consortium.
On top of that is the effect of Brexit on the availability of staff from the EU and beyond, with trade bodies all making the case against changes to freedom of movement. “We’re utterly reliant on migrant workers,” said Terry Jonesof the National Farmers Union. The lobbying might be helping Ministers to finally realise the potential impact on the sector, said Ian Wrightof the Food and Drink Federation. “It’s abundantly clear that government, until very recently, didn’t understand how business works.”
9. ‘Challenging is the new normal’
The 2020 conference finished with a panel of three top business leaders, who agreed that conditions in the market are as tough as they have ever been. “It’s challenging out there, but that’s the new normal,” said Zoe Bowleyof PizzaExpress.
Several high profile operators have already closed restaurants or gone through CVAs, and Mos Shamelof Las Iguanas predicted they wouldn’t be the last. “You can definitely see there being more casualties, unfortunately.” The upside is that closures have brought more affordable property and talented people to the market, opening up growth potential for ambitious brands. “As usual in these situations, there will be massive losers and massive winners,” Shamel said.
10. Delivery is a double-edged sword
Delivery was a recurring theme of the conference, and several speakers debated the need to take advantage of it while protecting margin and brand image. “It’s another channel to get your product in front of people… we decided to stop fighting it and embrace it,” said Bowley. Shamel said Las Iguanas had dealt with the challenge by launching a white-label delivery brand called Blazing Bird, available through Deliveroo and Uber Eats.
Earlier in the conference, Karen Jones had noted that delivery could harm businesses that don’t find the right offer. “Are we dancing with the devil?” she wondered. “It feels like we can’t do without it, but we pay a price for it… If you do it, make sure you do it very well.”
Peter Martin and Phil Tate are respectively Vice President and Chief Executive of CGA and leading commentators on the UK’s eating and drinking out market. This blog first appeared on the CGA website.